While privatization of state-owned enterprises has been one of the most important aspects of economic transition from a centrally planned to a market system, no transition economy has privatized all its firms simultaneously. This raises the issue of whether governments strategically privatize...

Stock market liberalizations provide a natural experiment to test for the causal relation between financial development and economic growth. We test this relation by investigating whether liberalizations facilitate growth through the particular mechanism of reducing capital market imperfections...